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Court Raises the Heat on Patentee Who Persisted with Baseless Infringement Suit

Much patent discourse during the last decade has been driven by the perceived vulnerability of manufacturers to patent assertion by so-called “non-practicing entities,” known as NPEs (or less charitable epithets), who own patents but do not practice them. A Pricewaterhouse Coopers 1995-2009 patent litigation study, The Continued Evolution of Patent Damages Law, puts the fraction of decided patent cases involving NPEs over that period at 19.4%.

While the merits of a patent suit might be considered to rest on the simple question of whether a party is infringing a valid patent, part of the disquietude with NPE suits derives from the perception that NPEs have nothing to lose because they are not in a business covered by the patents at suit.

The Federal Circuit’s recent decision, in MarcTec, LLC v. Johnson & Johnson and Cordis Corporation, is likely to change that perception. It affirms a federal trial court’s judgment against an NPE and an award of $4.9 million to cover the attorneys’ fees and expert costs incurred by the defendants.

The two patents asserted by plaintiff MarcTec are drawn from a portfolio of over 219 U.S. and foreign patents and 143 pending patent applications held by MarcTec, many of which are listed on the curriculum vitae of Dr. Peter Bonutti, an Effingham, Illinois orthopedic surgeon and (obviously) a prolific inventor.

The two patents, differing in claims but otherwise identical, are drawn to a “tubular member” (or a “surgical device”) that is implantable in the body, is expandable and has a polymer containing a therapeutic agent bonded to it. One might be excused for thinking that this sounds like the description of a drug-eluting stent (or “intraluminal graft,” as it is called in the art).

In fact, during examination proceedings in the Patent and Trademark Office, a 1992 patent describing just such a stent was cited as prior art. To obtain allowance of his patents, Dr. Bonutti drew a distinction between a “stent” and a “surgical device” and remonstrated that he was claiming not the former but the latter. He also amended his patent claims to require that the polymer be bonded by application of heat and that the bonded material be “non-flowable and nonadherent” at room temperature.

MarcTec’s expert, Purdue professor Paul Sojka, advanced a valiant argument that when an aerosol strikes a surface, the droplets must heat up by an amount, and for a (very) short duration, which he calculated. One step in the J & J/Cordis stent-coating process involves spraying, from which MarcTec asked the court to infer that the process was one of heat-bonding covered by its claims. The court declined, finding that the J&J/Cordis process involves a coating that adheres without the use of heat.

Despite the trial court’s construction of the claims in a manner that made proof of infringement impossible, MarcTec pressed ahead with the suit.

The plaintiff’s theory that local thermodynamics might play a role in the adhesion of a polymer to a metallic surface does not seem implausible; it is merely irrelevant to the case, since the claim-construction ruling established that the patents in suit did not apply to stents while the allegedly infringing product was decidedly a stent.

Despite a Markman ruling adverse to the plaintiff across the board, the plaintiff slogged on, whereupon the trial court granted summary judgment in favor of the defendants. The court also charged the costs of defendants’ legal defense and expert fees to the plaintiff because bringing a baseless or frivolous suit may render the case “exceptional” under the patent statute and entitle the accused infringer to costs.

On appeal, MarcTec’s argument that subjective bad faith had not been shown did not avail it, with the Federal Circuit upholding the award of costs on grounds that the lawsuit was objectively baseless, no doubt pour encourager les autres.

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